Malaysia – Joar Ajer, Managing Director/VP
In 2011 Bandak Group made its first step outside Norway and set up an office in Malaysia to develop a customer base in the APAC region. Managing Director of Bandak Multi Fibre Sdn Bhd, Joar Ajer, discusses his experience in setting up the regional office in Malaysia and the hurdles the company faced in doing so.
As a means of introduction, could you start by explaining the scope of operations Bandak Group is involved in?
Bandak Group predominantly supplies mechanical parts to the subsea business; however we do supply to the maritime and defence sector to a limited degree as well. Our parts are fitted to subsea production systems and drilling systems. We aim to supply large turn key supply which means a wider and more complex scope of work that involve multi discipline skills.
There are 540 employees in the company with an annual revenue of over RM 500 million. Currently, there are eight factories in Norway and two in Malaysia but the Kuala Lumpur factory is in the process of relocation to join the other factory in Johor. Our customers are large offshore players such as FMC Technologies, Cameron and Technip.
In 2011 Bandak Group made its first step outside Norway and set up an office in Malaysia to develop a customer base in the APAC region. You were part of the initiator team. Can you share with us why did Bandak choose Malaysia as its first pick?
When we decided to focus on the APAC region it was because of the market outlook in the region and that our core customers are present in the region. We had two regional headquarter locations to choose from, Singapore or Malaysia. In Singapore, we carried out a search and decided the market, although developed and very easy for international players to do business in, did not justify the considerably higher cost that is required compared to Malaysia.
On top of that, all of our clients in the region have offices and manufacturing facilities in Malaysia. We started in Kuala Lumpur initially with an acquisition of a small company. It offered us an opportunity to familiarize ourselves with the region and establish a customer base in the APAC region and also to understand the needs in the region.
Back in 2011 when you first entered the Malaysian market, were there any specific challenges you faced as a result of this transition?
That was an unstructured but enjoyable process. We didn’t have any contact points, so there were a lot of calling and a lot of meetings. Some of the meetings were good, and others were a waste of time.
Initially, we struggled to build long lasting solid relationships with people on the ground in Malaysia. The turnover in general for people in APAC is considerably higher than that of Norway, you can meet an individual one day but by the next day they can be gone. All the effort you have put into building a business relationship is wasted, and you have to start again.
The first one and a half years in Malaysia were difficult. However, we saw an opportunity in APAC and were committed to it. Now we are close to generating 10 percent of the group’s revenue from our Malaysian activities, and we are looking to generate 20 percent of the group’s revenue as run rate by end of 2016.
In M&A, one of the toughest things is “cultural” integration. Both Bandak and Multi Fibre have very strong corporate identity, Multi Fibre having a long family history. How difficult is it to “blend” the two cultures?
It was a long term task to convince the owner that selling to Bandak was the right option. It was a family ran business, and he had spent almost 40 years building the company up to a successful enterprise.
I had been in consultation with the individual since 2011 when we were discussing joint venture partnership and other options. But it was not until two years after the initial consultation that they see that Bandak could be a good choice.
By building confidence in both companies the integration was smooth. A large proportion of the previous workforce has been employed in the company for a long time and is very experienced in their role. This in combination with our key people from the Kuala Lumpur operation makes us strong and skilled to meet the demands in the business.
Bandak Group is developing into a global player and projected turnover in 2014 is approximately NOK 900 million/USD 150 million. Can you give us a brief overview of Malaysia’s importance and contribution to this global figure?
Malaysia is getting bigger. Our target is for Malaysia to contribute 20 percent of group revenues by 2016. Next year we predict that Malaysia will contribute 10 percent to group revenue. Therefore, we have a target to double our revenue within a year. We plan to achieve this through organic growth and acquisition.
Key focus areas in the start-up of Bandak Malaysia is to develop a customer base in the APAC. What has been your strategy to develop such a customer base?
Most companies we look to do business with are already on our customer list, FMC, Cameron, Technip e.g.. It’s more important for us to expand the business within these few key accounts and build a stable ongoing business relationship with them, than look elsewhere.
There are five to six accounts that make up the majority of our revenue in Bandak’s business and these accounts have to be nurtured. It’s not as straightforward as a simple supply and demand relationship. The region poses a unique set of challenges that requires the cooperation of both parties to overcome them.
After a career in your home country Norway, you arrived in Malaysia in 2011. What are the fundamental differences that you need to take into account between countries like Malaysia and Norway?
To a certain extent, it does not matter who are your partners in Norway, you will have to start all again. Even with some of our bigger clients in Norway, we have had to forge a new relationship in Malaysia. Often different regional headquarters have a different set of needs and requirements and our activities need to reflect this.
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